<p>
  In the last chapter, we modeled the stock price with the Geometric Brownian motion. The logarithm of return \(\text{ln}(S_T/S_0)\) follows the normal distribution \(N\left[(\mu-\sigma^2/2)T,\sigma^2T\right]\). It means the logarithm of stock price\(\text{ln}(S_T)\)follows the normal distribution \(N\left[\text lnS_0+(\mu-\sigma^2/2)T,\sigma^2T\right]\). Based on this basic assumption, in this chapter, we will talk about a famous option pricing model: Black Scholes Merton Model.
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